Aurora Cannabis Inc (OTCMKTS:ACBFF) is coming back strong after a correction hit a few large producers on the Canadian side of the sector. After successfully becoming the Great White North’s largest cannabis producer – passing Canopy after the acquisition of CanniMed – some shorts have entered the market as many see the next few months essential for ACBFF to make the expensive purchase worthwhile to their bottom line. The deal was inked at a time when cannabis shares were in a frenzy. ACBFF initially offered CanniMed shareholders C$24 a share but soon realized that it won’t cut it unless the company is willing to pay up. Eventually, the friendly deal was struck on January 24, 2018, with Aurora agreeing to pay an amount of around $43 per share based on an implied Aurora share price of $12.65 and a 3.40 exchange ratio on the day of the announcement.
The other thought behind the hefty price tag is the expertise that comes over in the deal from CanniMed. ACBFF, while a huge operator, does not exactly have the best track record when it comes to cultivation and processing. Furthermore, while ACBFF had a similar market cap to Canopy, the company only has about 20% of its operating capacity – in fact, there prize production facility, Aurora Sky, has not received its sales license yet. As legalization looms on the horizon, this prospect seemed to be apparent to Terry Booth and crew, so they made a deal to try to close the gap and CanniMed offered over 7,000 kg of existing production capacity and leading oil extraction capabilities.
Aurora Cannabis Inc (OTCMKTS:ACBFF) is a licensed producer of medical marijuana pursuant to the Marijuana for Medical Purposes Regulations and operates a 55,200 square foot expandable state-of-the-art production facility in Alberta, Canada.
ACBFF’s wholly-owned subsidiary, Australis Capital Inc., seeks to be an active participant in the U.S. Cannabis market. Aurora is trading on the Canadian Securities Exchange under the trading symbol “ACB”. The company is headquartered in Vancouver, Canada.
According to company’s materials, “Aurora’s wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., is a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations. The Company operates a 55,200 square foot, state-of-the-art facility in Mountain View County, Alberta, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island.
In addition, the Company holds approximately 9.6% of the issued shares (12.9% on a fully-diluted basis) in leading extraction technology company Radient Technologies Inc., based in Edmonton, and is in the process of completing an investment in Edmonton-based Hempco Food and Fiber for an ownership stake of up to 50.1%. Furthermore, Aurora is the cornerstone investor with a 19.9% stake in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis. Aurora also owns Pedanios, a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany.”
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Furthermore, ACBFF has accumulated a pool of active registered patients close to 20,000 by the end of September 2017 representing an impressive growth since 2016. By acquiring CanniMed, it is able to expand its patient base significantly as CanniMed has operated in the medical cannabis sector for more than a decade.
So, it begs the question, if ACBFF, which has a reputation as an aggressive player in this new burgeoning market, actually got caught lagging behind in physical production numbers? These next few weeks will be important for the stock as investors and analysts weigh in.
Now trading at a market capitalization of $3.11B, ACBFF is pulling in trailing 12-month revenues of $23.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 168.6%. The company continues to soak up market share and the race is one with other big names like Canopy and Aphria, but these next couple weeks will be vital for ACBFF as they look to convince investors their recent deal was worth it. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $ACBFF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $ACBFF, either long or short, and we have not been compensated for this article.